News
Lower Production Expected to Ease Pressure on Prices in 2020/21
For Immediate Release
Date Posted: 1 December 2020
Executive Summary
Highlights from the December 2020 Cotton This Month include:
- The global production estimate has been lowered to 24.7 million tonnes for 2020/21
- The global consumption estimate remains steady ay 24.3 million tonnes
- Global trade is expected to climb to 9.4 million tonnes
- Ending stocks for the 2020/21 season are expected to decline to 21.7 million tonnes, slightly easing pressure on prices
Lower Production Estimate to Ease Pressure on Prices in 2020/21
It seems as though cotton prices have been under pressure forever — certainly since the pandemic began — but a projected reduction in global production, from 24.9 million tonnes to 24.7 million tonnes, could ease that pressure slightly due to lower year-ending stocks in 2020/21.
While the recovery of consumption has been slow and is expected to remain steady at 24.3 million tonnes next season, global trade is expected to do more than improve — it’s expected to exceed pre-COVID levels, reaching about 9.4 million tonnes.
The USA and China are still engaged in a trade war, although the phase-one trade deal is mitigating tensions somewhat. Under the current terms of the agreement, China would purchase record levels of US agricultural products. From the April to September period, China has imported 65% more cotton from the United States over the preceding period. With Phase One of the trade agreement going into effect on 20 February 2020, the increase in imports was anticipated to be seen in April given the time to react and shipments to be received by China customs.
In terms of prices, The Secretariat’s current price projection for the year-end 2020/21 average of the A Index is 69.4 cents per pound this month.
Cotton This Month is published at the beginning of the month with the Cotton Update published mid-month. The Cotton Update, which is included in the Cotton This Month subscription, is a mid-month report with updated information on supply/demand estimates and prices. The next Cotton Update will be released on 15 December 2020. The next Cotton This Month will be released on 1 February 2021.
If you are a subscriber to ‘Cotton This Month’, please access your account with your user name and password by clicking here.
To subscribe to ‘Cotton This Month’, please click here, then click ‘Paid Publications’ and select the version you want to subscribe to.
Please contact the author, Ms. Lihan Wei, with questions on this report.
_______________________________________
About the International Cotton Advisory Committee (ICAC)
Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. The ICAC does not have a role in setting market prices or in intervening in market mechanisms. For more information, please visit www.icac.org.